Britain and America have announced a important commercial pact that will preserve no tariffs on British drug shipments entering the American market.
Key Provisions of the Deal
In exchange for the tariff guarantee, the UK has committed to boost expenditure on medicines through the public health system. This commitment ensures that tariffs on these crucial goods will remain at nothing for a period of 36 months.
This deal comes after earlier statements to significantly raise import taxes on patented drug imports, with increases floated as high as double the cost.
"This agreement between the Britain strengthens the worldwide climate for innovative medicines and brings much-needed equity to U.S.–U.K. pharmaceutical trade," an announcement said.
Commercial Significance
Pharmaceuticals represent one of the Britain's biggest exports to the US, which is by far the primary market for major companies like GSK and AstraZeneca.
Trade data show that in the 12 months prior to last September, the UK exported medicines worth £11.1bn to the US. This amount accounted for nearly one-fifth of all goods exports in that span.
"This deal secures work, boosts funding and facilitates the UK to emerge as a global hub for medical research," the Business and Trade Secretary stated.
Key NHS Changes
The agreement involves several notable pledges from the British government:
- Price Threshold Increase: The UK will increase the price threshold at which it deems new medicines to be prohibitively costly by 25%.
- Increased NHS Spending: There is a target to increase total NHS spending on treatments from 0.3 percent of Gross Domestic Product to 0.6% over the next decade.
- Rebate Cap: The percentage drug companies must refund to the NHS to stay within budget will be limited at 15%. Last year, refunds were more than twenty percent.
Broader Context
This agreement takes place against a long-running row between the pharmaceutical industry and the UK government over drug pricing and NHS adoption.
The disagreement were exacerbated by claims that US patients were charged significantly more for the equivalent treatments than patients in the UK and Europe.
Recently, several significant pharmaceutical investments in the UK have been delayed or cancelled, while multi-billion-dollar expansions have been pledged toward projects in the United States.
A senior figure acknowledged that the NHS needed to increase expenditure on medicines, noting that its spending on drugs had declined as a proportion of its resources over the last ten years.
